What are NFTs? The Beginner’s Guide to crypto-collectibles

What are NFTs? You’ve certainly heard about the digital arts that move millions of celebrities. Find out all about them!

NFTs were a hot topic in 2021, and they’ve been getting more and more popular ever since. But what exactly are these digital arts worth millions of dollars? Why are so many important people spending money on NFTs? Are NFTs the new expensive cars and watches? How can I buy my own NFT? In this tutorial, we will explain everything a beginner needs to know to get a little more involved in the world of NFTs. Let’s do it!

What are NFTs?

For starters, NFT is the acronym for Non-Fungible Tokens. This means that they cannot be duplicated as they are fundamentally unique.

Explaining from the beginning, a Token, in the cryptoverse, is the digital representation of an asset. Whether that asset is money, a property, or a physical or digital work of art, Non-Fungible Tokens are registered on a blockchain and are therefore impervious to copying and easily proven valid. On the other hand, Fungible Tokens are different, as, although their validity is also ensured by blockchains, they are not unique. Examples of Fungible Tokens are cryptocurrencies like Bitcoin.

For example, if you buy the Token for a work of art, you own the rights to that art. Most of the famous NFTs these days are digital graphic arts registered on the Ethereum blockchain network.

How can I check the validity of an NFT?

One of the most frequently asked questions about digital arts NFTs is this one. How can I prove my NFT is genuine if anyone can download my image file?

You can print Monalisa’s painting and hang it on your wall, but you won’t have the original work at home, nor the value of the art in your possession. Likewise, if you download an NFT image, you will only have one copy of no commercial value.

Actual ownership of digital arts is sole with those who own their NFTs, which act as a digital certificate of ownership. And no, it is not possible to copy this authenticity code, as it is registered via smart contracts in a public and immutable database, that is, on a blockchain. Therefore, they can be stored in decentralized networks that work like clockwork, without failures and without the control of intermediaries.

What are NFTs used for?

NFTs are reliable digital representations of possessions, so questioning the usability of an NFT would be the same as questioning the usability of any other possession. Why have a work of art? Why have a real estate property that you don’t live in? And why have jewelry, branded watches, or any other collectibles?

For vanity, to have your money safe in an asset that will appreciate in value, to be part of a select group of people with the same items, and so on. So, the same reasons that lead us to acquire anything. For security, social appreciation, and pleasure.

It’s nothing new that people like items that set them apart from others, to have something exclusive, or to belong to an elite. The NFTs can represent all that and more, as was already seen in January 2022, when the NFTs market was at its all-time high.

In addition, one of the most promising uses of NFTs is linked to the gaming industry. Some very interesting blockchain video game projects use NFTs as game characters, and own cryptocurrencies as tokens to be used in gameplay.

The most famous of these play-to-earn games is Axie Infinity, where players collect and battle their NFT creatures and are rewarded with crypto, which had an all-time value of 4.14 billion dollars in 2021.

How can I buy an NFT?

Buying NFTs is a simple process considering the average difficulty level of cryptocurrency investments. You just need to go on the platform where the NFT you want to buy is sold and have enough cryptocurrency funds to make the purchase and pay the fees. It is worth mentioning that each marketplace has its own characteristics and rules.

Where can I buy an NFT?

NFTs can be purchased on specialized marketplaces or the projects’ official websites or apps. See below the most popular platforms to buy NFTs:

• OpenSea: the largest and most famous marketplace for NFTs on the Ethereum network;
• Binance NFT: trading platform of one of the largest US-regulated cryptocurrency trading platforms;
• Mintable: one of the best NFT marketplaces on Ethereum’s blockchain;
• Solanart: as the name implies, it is the first fully-fledged NFT marketplace on Solana;
• Rarible: NFTs marketplace and a distributed network built on Ethereum;
• Magic Eden: one of the largest platforms for purchasing NFTs on the Solana network.

Minting and NFT vs Buying an NFT

When it comes to buying NFTs, there are two ways to acquire them: through buying NFTs already created in marketplaces, or paying for a new creation, ie minting NFTs.

Usually, you can only mint NFT when the project or a new collection is being released. The team announces a date and time for the minting of the NFTs and either the public or a select group of people will be able to buy them at a pre-set price.

When you buy an NFT on a marketplace, differently, we are just transferring an NFT from one wallet to another. That is, without the need to use the blockchain to create a new code and register the NFT on the network.

In this process of buying NFTs that have already been minted, most of the time, there is an online auction, where the biggest bidder is the one who takes the NFT at the end of the pre-established period.

How much do NFTs cost?

The prices of NFTs can vary greatly depending on the project’s fame, usability, demand, and supply. Not to mention the value of the cryptocurrency at the time of purchase.

For example, as of January 2022, the price of entry to buy an NFT from Bored Ape Yacht Club was 52 Ether or $210,000 at the time. Celebrities like Paris Hilton, Justin Bieber, and Neymar Jr. are among the NFT owners of this collection.

But if you think about minting an NFT, that is, creating a new one from scratch, the price is not so subject to market fluctuations. According to Yahoo Finance:

“The average cost of NFTs varies between different marketplaces; from $900 on Mintable, to $500 on OpenSea, and $150 on Valuable among others. Even so, the cost of NFTs are usually on the high side during weekdays, owing to a lot of on-chain activities. This further suggests that the cost of minting NFTs are relatively cheaper on Saturdays and Sundays.”

It is, however, increasingly rare to be able to be minting good NFT projects. As with any risky investment, the future profits of that project are uncertain, and much of its value could be lost if the team behind it is not reputable.

How can I create an NFT?

Creating NFTs and putting them up for sale on marketplaces is a relatively simple process as well. At OpenSea, the largest platform for buying and selling NFTs on the Ethereum network, to create an NFT you only need:

1. Connect your digital wallet
2. Upload images, videos, music, or 3D models up to 100 MB per file;
3. Name and describe each NFT.

Of course, NFT projects involve much more than just putting them up for sale. From design, marketing, brand partnerships, and owner benefits, there’s a lot to be done to create a successful NFT collection.

However, you should pay attention to the Blockchain gas fees where you will register your NFTs. The Ethereum network is known for having the highest gas fees, which vary depending on how congested the network is, while other blockchains like Solana have much lower fees.

In addition, with each sale of NFT on platforms you must take into account that it will keep a commission per transaction — a value that should be around 2.5%.

Famous celebrities who own NFTs

The NFTs were one of the biggest topics of conversation in 2021, having their all-time high period in January 2022. Much of the hype was due to mass adoption by celebrities. Meet in the list below some of the biggest celebrities who have already declared to the public to have invested in NFTs:

• Paris Hilton;
• Justin bieber;
• Lindsay Lohan;
• Eminem;
• Reese Witherspoon;
• Neymar Jr;
• Snoop Dogg;
• Serena Williams;
• Steve Aoki;
• Cara Delevingne
• Jimmy Fallon;
• Timbaland;
• Gwyneth Paltrow;
• Eva Longoria.

Should I get myself an NFT?

The choice of whether or not to invest in an NFT is entirely personal. Just like any investment in the cryptoverse, NFTs involve high risks as well as high upside possibilities.

The best thing to do is to carefully research the project, observe the market and, if you are going to invest, do it at the right time.

I hope you enjoyed learning more about NFTs in this article. If you have any questions that we haven’t answered yet, please write them in the comments so we can complete the text!

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Originally published at https://ladynakamoto.com on March 7, 2022.